How The Internet Of Things Makes Dumb Devices Smart

One day soon, we will wake up and wonder how we ever survived in a world of ‘dumb’ disconnected things. Our homes – including our pantries, closets and shoe racks – our offices, factories and vehicles will be full of connected devices.

The World Economic Forum estimates that the number of connected devices will grow at a compound annual growth rate (CAGR) of 21.6% over the next four years from 22.9 billion in 2016 to a headline-grabbing 50.1 billion by 2020 – equivalent to almost five connected devices for every person on the planet.

But that's just the beginning. Welcome to the Internet of Things (IoT).

As the sensors grow ever cheaper, and the network grows ever larger, the more data we as individuals, professionals, companies and governments can collect and analyze to make ever more intelligent decisions. Underpinning the growth of IoT are tumbling prices for the sensors that turn ‘dumb’ things into ‘smart’ devices and capture data from the environment around them, and the vast data-centric and mostly wireless networks that connect these devices to each other and to the broader Internet.

Just like other commoditizing electronic components, fierce competition and Moores’ Law has driven down prices, especially for accelerometers and gyroscope sensors typically used in smartphones and other mobile devices.

As a result manufacturers can add sensor and communications modules to almost any product for a few dollars bringing the day when everything (valued at $10 or more is) I0T-ready a big step closer. “Our perspective is that cost of both the sensors and devices is approaching free and the size is approaching invisible,” said James Bailey, managing director of the mobility practice at Accenture last year. “Literally everything will have IOT technology at some point,” he said.

At the same time, the cost of embedded processors, networking and cloud-based computing – other key components in the IoT world – have all fallen.

The Opportunity for Transformation

IoT – particularly the Internet of Industrial Internet of Things (IoIT) – is about hyperconnectivity and sensor-generated data – huge wads of it. But the real value lies in what you can do with that data – in the outcomes it enables, rather than the collection, transmission or storage of that data.

IoT and other data is the rocket fuel of the digital economy.Nevertheless, a recent study found that while 81 percent of business executives believe that successful adoption of industrial IoT is critical to their company’s future success, only 25 percent have a clear industrial IoT strategy.

A challenge and a huge opportunity remains for those enterprise software and services companies that have the technology and tools available to help people and businesses make sense of, analyze and harness the Tsunami of data that we are about to be engulfed by.

The real business potential to add value through IoT doesn't lie in the sensors or the networks that connect them. It exists in the potential of real time big data analytics to transform business operations and improve our lives. Big data analytics and machine learning will deliver personal and business insights and will enable us to make immediate decisions based on that data – rather than relying as we have in the past, on guesswork or out-of-date forecasts.

IoT data is already helping companies track goods on their way through the supply chain and immediately alert managers in case of theft or damage, reducing waiting times in busy ports, playing a key roll in jet engine and tractor predictive maintenance, helping farmers optimize crop yields and improving safety across a number of public and private enterprises.

The Market

So how big is the market opportunity? Cisco, the networking equipment group, predicts the global Internet of Things market will be $14.4 trillion by 2022, with the majority invested in improving customer experiences.

But the implications of IoT and the big data analytics that it feeds will go far beyond traditional business models and have a profound impact on both enterprises and individuals. When combined with machine learning and cognitive computing, the insights derived from IoT data will enable us as individuals and businesses users, to deploy intelligent agents empowered to make autonomous decisions and negotiate with other agents on our behalf.

This is not about machines replacing humans. Rather intelligent apps will augment humans’ ability to run businesses and their own lives. As consumers and employees we will deploy intelligent agents to undertake repetitive tasks, find the best options for us and, as our confidence in agents grows, negotiate and strike deals on our behalf.